Indian property trade is well known for its massive involvement of black money and the market practices of paying a little bit white and just dumping the rest of the cash and paying minimum taxes and hiding your black money forever. Right? In an interview with famous Luxury Real Estate Consultant Ashutosh Bhogra (www.ashutoshbhogra.com) told us how the trend is changing.
A few years back the trend was something like 25-30% in white money and the rest used to be black money. In some places even 10%. It is just loosely called cash (black money sounds too criminal). Then later it evolved to 40-50% max but still, deals could be done at much lower. With demonetization a lot changed and people became aware (scared) of the possibility of running into trouble. Also, the IT department became more effective and active and aggressive and so people have become more pro-white. Also with the introduction of GST, a lot more business gets conducted in white generating tax for the government and white for businessmen.
You see the main challenge is that it is morally completely acceptable to deal in black money and evade taxes and abuse the government (the last one is a fashion). So actually it is not something that people can’t talk about. In the western world if you said such a thing people would look at you like you are a criminal.
In most metropolitan cities of India where it’s more high-rise buildings offering apartments, people are buying property in white or we can say the accounted money., because of the Government’s base price policy and the profile of the buyer who is majorly a salaried class and earning handsome amount. Presently, 80% of the buyers are salaried class. While almost all newly developed residential properties can be bought through 100% white money, now many resale properties too are available without the black component.
In recent times this white has gone more and more up. In places like South Delhi, a lot of deals have taken place and are taking place in all-white. We always specialized in this thing but never was it as easy to get these deals done. People are coming and asking for getting all white and plenty of buyers are also coming to buy in full white. However, there are still more sellers for full white than there are buyers, but still, the ratio has changed very dramatically. If this trend continues, everything will be in full white and will be so much easier to conduct property transactions. I guess if the government lowered the stamp duty on the purchase of properties that would also give a major boost to the full white crowd.
India is witnessing unprecedented growth and is very well-placed to be a developed nation in the next 25-30 years. If that has to happen, we will have to move to the full white model like the west. Also, this model is so much more efficient and fast. Just think, you decide the price and give a cheque for advance and a cheque or online transfer for the rest and it’s all done and dusted. Compared to hiding cash, bringing it covertly and paying and taking a risk, also what if the seller absconds, or someone finds out and loots/ murders, etc. etc. These are real things that do happen. Switch to all-white and make it a win-win for all. This of course will happen slowly but we are definitely past the midpoint on this now.
(The author of this article, Mr Ashutosh Bhogra is a luxury real estate consultant- Contact: 91-9818968866